We've never had anyone explicitly decline. Maybe 5 or 10% drop off the radar at this stage - perhaps they didn't feel able to complete it successfully?

If it were feasible, I'd actually prefer to pay candidates consulting-rates to do a (useful) 4-5 day project as a final interview. We've actually done this 3 or 4 times - but only when the candidate is thinking about moving his family from abroad to come work for us. We feel like there's an increased obligation on us to make sure we're sure in these cases.

Normally, though, it's just not practical. People are normally in jobs already, and asking them to take 4 or 5 days of holiday isn't fair. Especially if they were in the final stages of applying to 3 or 4 different companies. That's your entire year's holiday allowance down the drain.